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Home , Patrick McHenry, Peter DeFazio, Ron Klain, Virginia Foxx

New Congress and New Administration: A Different Legislative and Policy Landscape for Companies

January 22, 2021 Agenda

1. Congressional Landscape 2. Administration’s New Landscape 3. Financial Services 4. Antitrust 5. Consumer Protection/Privacy 6. Questions

2 LAY OF THE LAND IN THE 117TH CONGRESS (SENATE)

Health, Education, Commerce, Science Homeland Security Armed Services & Gov. Affairs Labor & Pensions & Transportation

Gary Peters Rob Portman Patty Murray Jack Reed Jim Inhofe Maria Cantwell Roger Wicker (D-MI) (R-OH) (D-WA) (R-NC) (D-RI) (R-OK) (D-WA) (R-MS) Judiciary Finance Banking, Housing & Urban Affairs Aging

Dick Durbin Charles Grassley Mike Crapo Sherrod Brown Pat Toomey Bob Casey Tim Scott (D-IL) (R-IA) (D-OR) (R-ID) (D-OH) (R-PA) (D-PA) (R-SC) Agriculture Appropriations Budget Foreign Affairs

Debbie Stabenow John Boozman Patrick Leahy Richard Shelby Lindsay Graham Bob Menendez James Risch (D-MI) (R-AR) (D-VT) (R-AL) (I-VT) (R-SC) (D-NJ) (R-ID)

3 PRIVILEGED AND CONFIDENTIAL – ATTORNEY WORK PRODUCT LAY OF THE LAND IN THE 117TH CONGRESS (HOUSE)

Labor & Education Transportation Appropriations Energy & Commerce Financial Services

Bobby Scott Peter DeFazio Rosa DeLaura Cathy Patrick McHenry (D-VA) (R-NC) (D-OR) (R-MO) (D-CT) (R-TX) (D-NJ) McMorris (D-CA) (R-NC) Rodgers (R-WA)

Oversight & Science, Space Government Reform Homeland Security Judiciary Ways & Means & Technology

Carolyn Bennie Mike Rogers Jerrold Jim Jordan Eddie Bernice Frank Lucas Maloney (R-KY) Thompson (R-AL) Nadler (R-OH) (D-MA) (R-TX) Johnson (R-OK) (D-NY) (D-MS) (D-NY) (D-TX)

4 PRIVILEGED AND CONFIDENTIAL – ATTORNEY WORK PRODUCT The Senate Confirmation Process

• Nominees are subject to lengthy questionnaires from the Senate Committee in charge of their nomination as well as FBI background checks.

• Nominees must also clear any ethical concerns related to financial entanglements – a lengthy financial disclosure report is required to be filed with the Office of Government Ethics detailing all assets, liabilities, and sources of income.

• Only one nomination hearing (DoD) is scheduled before President-elect Biden is sworn in, the rest will likely occur towards the end of January and early February.

• With Democrats now gaining Senate Majority (and chairmanships of committees overseeing nominations), few, if any, roadblocks are expected. . Due to recent rule changes, filibusters can now be broken with a simple majority vote, thus Republicans are unlikely to block any nominees unless they can peel off some Democrats.

5 Key Appointments: Ron Klain, White House Chief of Staff

• Background . Served as White House Ebola Response Coordinator . Served as Biden’s first chief of staff when he became Vice President . Served as chief of staff for Vice President . Served as associate counsel to President in charge of judicial selection . Worked at Revolution LLC and was a partner at O’Melveny & Myers

Major Pillars of the Biden Administration Agenda . Climate Change . Economic Relief . Pandemic Relief . Racial Justice These themes will carry across various agencies of the incoming administration and the individuals chosen to lead and shape those agendas.

6 Key Appointments: , Attorney General

Background • Currently serves on the Court of Appeals for the District of Columbia, where he was Chief Judge for seven years • Veteran of the Department of Justice and served as Deputy Assistant Attorney General for the Criminal Division and Principal Associate Deputy Attorney General • Investigated and tried cases involving public corruption, drug trafficking, and fraud.

Likely Priorities • Restore public confidence in DOJ as non-partisan and non-political • Likely to revert to the Obama-era DOJ approach of aggressive enforcement of the financial sector, including holding executives, not just corporations, responsible for wrongdoing. • Expected to beef up Civil Rights Division and aggressively investigate suspected instances of police brutality

7 Key Economic Appointments: Janet Yellin, Treasury Secretary

Background • Served as the Chair of the Federal Reserve from 2014 to 2018, and as Vice Chair from 2010 to 2014 • Previously, served as President and Chief Executive Officer of the Federal Reserve Bank of San Francisco; Chair of the White House Council of Economic Advisers under President Bill Clinton; Federal Reserve Board Governor; and business professor at the University of California, Berkeley, Haas School of Business. Likely Priorities • Replenish the Treasury’s ranks, including the Domestic Finance division. • Front and center on any further government stimulus packages • May get tougher on banks: last action as Fed Chief was crackdown on Wells Fargo

8 Key Economic Appointments: Mayor , Department of Labor Secretary

Background •Currently the Mayor of , Walsh’s nomination enjoyed wide support from major unions such the AFL-CIO’s two largest affiliates the AFT and the American Federation of State, County and Municipal Employees. •Prior to becoming Mayor, Walsh was a state representative and head of the Boston Building Trades Council, a union group. •Has a close personal friendship with President-elect Biden, who spoke at Mayor Walsh’s 2017 inauguration. If confirmed, Mayor Walsh will be the first labor union member to serve in the role in half century. Likely Priorities • The immediate focus will be providing support to the millions of unemployed Americans. • Expect a robust repeal and replace regulatory agenda and increased enforcement of laws governing the relationship between business and labor.

9 Key Economic Appointments: Gov. , Commerce Secretary

Background . Currently the governor of Rhode Island, she has served in that position since 2015. . Previously served as General Treasurer of Rhode Island. . Prior to entering government, Governor Raimondo worked at a venture capital fund backed by Bain Capital before starting her own investment fund, Point Judith Capital.

Likely Priorities . Expected to focus heavily on relationship and competition with China. . Encouraging trade that emphasizes protecting the environment and combatting climate change . Post-COVID-19 pandemic economic recovery

10 Other Top Agencies To Watch

• Health and Human Services – . COVID-19 response and vaccine distribution . Protecting and expanding the Affordable Care Act, which may include additional regulation of healthcare industry . Reproductive rights and women’s access to healthcare

• U.S. Trade Representative – . Expected to advance policies more closely aligned with free trade . Will play a key role in any deal to rejoin TPP, which Biden has pledged to renegotiate.

• Chair, Securities and Exchange Commission . In the running: Former SDNY U.S. Attorney Preet Bharara, former CFTC chief Gary Gensler

• Director, Consumer Financial Protection Bureau . In the running: FTC commissioner Rohit Chopra, Rep. (D-CA), CFPB fair lending director Patrice Ficklin

11 Key Issue: Financial Services

Landscape: President-elect Biden and congressional Democrats have pledged to increase financial regulation, consider banking-related legislation, and bring more enforcement actions against the financial services industry. Congress: Now that Democrats control the senate, expect discussion of the following issues: . Updated Glass-Steagall: Biden-Sanders Task Force plan calls for expanding separation between retail banking institutions and investment banking. The 2020 Democratic Party Platform expressly supported “an updated and modernized version of Glass-Steagall.” . Strengthening Dodd-Frank: Biden-Sanders plan calls for strengthening Dodd-Frank Act, particularly on consumer lending, including credit cards. Unclear whether Biden Administration will do so through legislation or regulatory action. . Financial Access to Underserved Communities: Democrats will likely focus on legislation that ensures banks and financial institutions offer services to help low-income communities and demographics traditionally underserved by the industry. This may include creating a Public Credit Reporting Agency within the Consumer Financial Protection Board to provide borrowers with a government option in lending. . Relieving Student Loan Debt: Proposals include forgiveness of up to $10,000 of student debt per borrower; pauses in monthly payments and interest accruals.

12 Key Issue: Financial Services

Executive Branch: The Biden campaign did not prioritize financial services issues, so his policy remains uncertain. Even so, the Executive branch of the Biden Administration will likely focus on the following areas. . Volcker Rule: Under the Trump Administration, Volcker Rule was changed. Democratic Platform calls for strengthening the Volcker Rule. . Enhanced Regulation: Biden Administration is likely to roll back deregulatory efforts of Trump Administration and enhance financial regulation. . Strengthened Capital Requirements: Biden Administration may focus on tightening leverage requirements for banks and financial institutions. • Enforcement and Oversight: . Biden Administration will likely bring additional enforcement actions against financial services companies, advisors, and investors as well as seek harsher penalties. Biden-Sanders Task Force Recommendations call for criminal penalties under Dodd-Frank as well as holding financial institutions accountable for discriminatory lending practices in the housing market. . The Consumer Financial Protection Bureau is expected to have an enhanced role and increased enforcement actions. Following, the Supreme Court’s decision in Seila Law v. CFBP, Biden will have the ability to remove Director Kathleen Kraninger and can appoint a new director through the Federal Vacancies Reform Act of 1998. . A CFPB under Biden’s leadership is expected to pass emergency rules to assist Americans suffering financial hardships in the pandemic and increase rulemaking through enforcement in relation to broker- dealer regulations.

13 Key Issue: Antitrust

Landscape: There is a growing bi-partisan consensus that we have a “concentration” problem in certain sectors of the U.S. economy. President Biden, a Democratic-controlled Congress, and a Democratic-lead DOJ Antitrust Division and FTC will likely take a more aggressive stance with respect to antitrust legislation and enforcement.

Congress: U.S. House of Representatives Senate

David Cicilline (D)-RI Amy Klobuchar (D)-Minn.

Chair, Subcommittee on Incoming Chair, Antitrust Subcommittee on Antitrust

• Anticompetitive Exclusionary Conduct Prevention Act of 2020 – would shift significant burdens to defendants in monopolization cases. • Monopolization Deterrence Act of 2020 – would give FTC and DOJ ability to impose civil fines on monopolistic conduct.

14 Key Issue: Antitrust

• Merger Enforcement: The Biden Administration will likely engage in active merger enforcement, including a higher frequency of Second Requests and court challenges than that of the last four years. Mergers in health care, technology, and agricultural sectors—as well as potentially telecommunications, media, and financial services industries—are expected to receive especially close scrutiny. Agencies may also conduct a retrospective review of certain mergers, and explore using more novel theories of harm. “We will direct federal regulators to review a subset of the mergers Federal Merger Investigations and acquisitions that have taken 100 place since President Trump took 90 office, prioritizing the 80 70 pharmaceutical, health care, and 60 agricultural industries, to assess 50 whether any have increased 40 market concentration, 30 demonstrably harmed workers, 20 10 increased racial inequality, or 0 reduced competition, and assign 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 appropriate remedies.” Total Merger Investigations HSR Investigations -Biden-Sanders Unity Task Force Recommendations Non-HSR Investigations

15 Key Issue: Antitrust

• Platform Investigations and Litigation: Conduct by platforms with high market shares will likely remain a key focus for the federal antitrust agencies, as they seek to re-assert their global leadership in pursuing monopolization cases. Under the new Administration, the agencies may reassess the currently pending actions against Google (DOJ) and Facebook (FTC), but the cases will continue full-steam ahead and will likely occupy a significant portion of the agencies’ resources, absent expansion.

16 Key Issue: Antitrust

• Emphasis on Labor Rights: Given President Biden’s reputation as a supporter of unions and workers’ rights, it is reasonable to expect that the DOJ will continue—if not strengthen—its prosecution of labor- market restraints, including wage-fixing and “no-poach” agreements. We may also see federal legislation that aims to end the use of “no-poach” and “non-compete” agreements for certain workers.

17 FTC Consumer Protection Enforcement

• Anticipated Leadership Changes Commissioner Party Term Joseph J. Simons R 5/1/18 – • Potential Legislation (Chairman) 9/25/24 Rebecca Kelly Slaughter D 5/2/18 – • FTC Budget and Resource 9/25/22 Allocation Decisions Noah Joshua Phillips R 5/2/18 – 9/25/23 • Cooperation with Revitalized CFPB Christine S. Wilson R 9/25/18 – and Other Regulators 9/25/25 Rohit Chopra D 5/2/18 – 9/25/19

18 FTC: Anticipated Consumer Protection Priorities

• Increased pursuit of monetary relief • Increased use of consumer protection rulemaking • Increased pursuit of individual liability for corporate leaders • Increased reliance on unfairness theories, including with respect to data security

19 FTC: Anticipated Consumer Protection Priorities

• Increased pursuit of platform liability

• Increased scrutiny of algorithms that use consumer data

• Increased scrutiny of privacy issues related to ad targeting

• Expanded focus on children’s privacy

20 Department of Justice

• Leadership Changes

• Anticipated Priorities ‒ Renewed focus on preserving the integrity of the department and guarding its investigations and prosecutions from undue partisan influence

‒ Continued emphasis on combatting fraud against consumers and corporate fraud that victimizes the general public, particularly in the healthcare field . COVID-19 Hoarding and Price Gouging Task Force, established in March 2020 to address COVID-19-related market manipulation, hoarding, and price gouging. . National Rapid Response Strike Force, established in September 2020. Charged with investigating and prosecuting fraud cases involving major healthcare providers. “This Office, together with the Department’s COVID-19 Hoarding and Price Gouging Task Force, is working tirelessly to ensure that scam artists who seek to capitalize on the worldwide pandemic will be brought to justice.” – Richard P. Donoghue, U.S. Attorney for the Eastern District of

21 Securities & Exchange Commission

• Leadership Changes • Legislative Changes • National Defense Authorization Act strengthens SEC’s ability to pursue disgorgement

• Priorities • Investigating/responding to misconduct related to COVID-19 • Increasing oversight of broker-dealers and investment advisors • Bringing aggressive enforcement actions

22 Department of Health and Human Services

• HIPAA enforcement a priority • Continued emphasis on right of access enforcement • Reinvigorated HIPAA audit program • Privacy Rule revisions to address sharing patient information • Potential new legislation addressing telehealth privacy

23 Consumer Financial Protection Bureau

“Reverse the Trump administration’s efforts to weaken the CFPB” and “hold financial institutions accountable for discriminatory practices.” - WSJ 10/21/20 • Transition Review ‒ Leandra English • Enforcement Actions ‒ Ramp up in frequency and scale expected, and heftier fines against broader range of financial firms • Regulatory Priorities ‒ CARES Act and COVID-19 relief ‒ Rulemaking • Structural ‒ Increased federal/state cooperation

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PRIVILEGED AND CONFIDENTIAL – ATTORNEY WORK PRODUCT

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